How to Create Value and Competitive Advantage in an Organization - Coursework Example

To what extent and how a Strategic HRM approach can help to create value and competitive advantage in an organization and Section # of course> Strategic Human Resource Management Introduction: Every company has a strategy, is working on a plan and aims to beat others in the competition and get ahead. For this, they need to incorporate various elements of the company into their strategic plans that is the business stratagems and devise it in such a way which allows them to reach their goals as well as beat the adversaries in the competition for capturing more share of the market and becoming a leader. A company, during the course of its activities, will indulge into many kinds of management, be it be human resource management or public relations management. Doing it strategically and making it a part of strategy helps the company to do well in the long run. In this write up, the aim is to uncover the importance of doing human resource management as attached to strategy and the results of doing so, whether it helps in gaining competitive advantage or not, whether it increases the worth and value of the company or not. Every companys aim is to maximize its profits. But an intelligent and well managed company is one which takes care of its employees so that they can be motivated well enough to handle the customers in a brilliant way, ensuring loyal customers and better sales generation. Employees are that part of the company which should be considered the most vital as they are those which run the company on a daily basis. Whether the employee belongs to the top level management, middle level management, is a first line manager, is a non-manager or simply is a worker at the factory should not matter. What should matter is that they are all important and the company runs with the help of these employees. Therefore, importance should be given to all levels of employees irrespective of what part of hierarchy they belong to. (Armstrong, 2006) Moreover, if seen from another perspective, it can be said that if the employees are happy, they will take good care of the customers and if the customers are happy, they will come back to the company for repeat purchases and thus the worth of the company will rise, ultimately making the shareholders happy. So it all boils down to if the employees are happy or not. The Learning Organization: Moreover, the new concept nowadays for doing effective human resource management, this helps in the long run, is that of leading a diversified workforce in this ever changing environment. Intercultural diversity and being an equal opportunity employer is the thing of today’s age and the company which does not support it always loses out on the competition because diversity brings this unique quality within a company, which helps it excel and survive in even the toughest storms. When it is about treating all employees equally, the concept of the global village is being forgotten and that our world has evolved into it totally. And it needs to be seen that how this global village needs to be incorporated in a company so that it can survive in this competitive corporate world. Workforce diversity is one of the major components of a company which is surviving and adapting in and to the 21st century. Such a company is also known as a learning organization. Such organizations extract the best out of every culture, race and ethnic group that they can find and then use the various talents available to them. (Pfeffer, 1994) The Traditional HR Model: Let us discuss effective strategic human resource management with the help of the traditional HRM model: In this model, the centre portion is occupied by Grading, surrounded by other important activities, that is Reward, Staffing, Training and Assessment. Other sub sectors but not attached to any component individually are factors like Incentive, Motivation, Career Planning and Diversification. (Porter, 1998) Grading is a very important component which helps in fair and equity based job evaluation so that they can accurately fit into the grading structure. Job evaluation ultimately helps in deciding the interval ranking of various jobs in an organization, but might not be the deciding factor in terms of pay scales for all jobs. This is a vital part to apply strategy to because ultimately job satisfaction or job dissatisfaction depends on what your job is worth for in the organization and as an individual, how much you are contributing to the company as a whole. This realization is very essential to keep an employee going and thus grading systems should be designed in such a manner, which helps the company in establishing the right worth of all its jobs. Rewarding the employees for all their efforts and making sure that there is a distinction between who gets the extra special benefits and who does not because that will heat up the competition and keep everybody on their toes to work better and better. Rewards should be clearly linked to performance and not the quantity of work performed by an individual. The best way to link rewards to strategy is to link it with factors which will ultimately increase the value of the organization as well as help it differentiate the company from others. For example, there can be an honesty reward, an “innovation/creative idea” reward, a “good team work” reward. If these things will be explicitly told to the whole company in the beginning of the year, people might actually put extra efforts in the above categories in lieu of the reward only, helping the company achieve its strategy. (Turnbull, 1992) Moreover, the process of staffing is a very key factor to focus on if human resources management has to be linked to long run returns. Since the past decade or so, the way staffing is handled has changed a great deal. Staffing is now not just about filling up the empty positions in the company’s hierarchy, rather it is about employing and making use of top notch staffing techniques and ultimately employing the best of the best to keep the company competitive and leading. Terms like staffing metrics (also known as HR metrics or HR measurements) describe one of the techniques used to have a good measure of who should be hired and who should not be. Both qualitative and quantitative measures fall in this head. (Jackson, 2006) Organizational training is a very important aspect for the development and growth of organizations in general. This is because times are changing so rapidly, new technologies will continue to evolve and the trends will keep on changing. In such a dynamic environment, it is necessary for the organizations to adapt to the environment at present or else they might lose the competitive edge to some other company who is careful about the environment and its changes. When such changes have to be brought, effective change management has to be performed in order for the human resources to be made to feel at ease even after the change is brought. Therefore, old knowledge will have to be unlearned and new knowledge will have to be taught. In such critical situations, organizational training shows its real importance as it helps the employees to acquaint themselves with what is new and equip themselves with the required knowledge. In addition to the above mentioned components, assessment has to be made continually so that there is flow of ample feedback for the employees to receive and then work upon. It is important to know, for every employee, that what result their work did, in terms of helping the company grow and in terms of themselves climbing the ladder of the company’s hierarchy. All managers should be encouraged to do regular assessment of the employees so that annual assessment is easier to give and the manager does not miss out on any significant event that can alter the assessment in either direction. Managers should keep a record in writing of the significant activities and methods adopted by the employee so that assessment and giving feedback becomes easy. The theoretical limitations of the traditional HR model are that it misses out on the deeper things in life. For example, it will not focus on helping the employees to achieve self actualization while working at their organization. The traditional HR model talks about extracting the most out of employees and using it for the benefit of the company. what if the company gives so much to the employees that the employee sees the company as his identity and ultimately gives him a way of life. Full time commitment to the workforce gives such results as that of self actualization. Moreover, companies nowadays are focusing on finding the best employees for their own self but hardly do companies think about developing the social capital in general, which ultimately in the long run might join the company and help them excel. For example, this IT Company keeps regular competitions for youth to gauge who makes the best gadgets or does a brilliant innovation in IT. Because of such competition, young minds are getting diverted towards technology and how to use them. these young people might not be ready for doing jobs for this IT company, but the purpose of the company to initiate a project like this is that ultimately these young minds will grow into smart intelligent people, who might then chose the IT company as their employer. Investing in the social capital, for the better good of the whole society and all humans in general, is a very long term perspective, something that is missing from the traditional HR model. The practical problems of implementation that can be faced if the traditional HR model is implemented is that of effective reward systems which yield satisfaction on everyone’s part, often people will think that the rewards have not been distributed justly and there has been a biasness. Other problems that can be faced is that managers will lack the ability to assess the employees well and in an equitable manner, thus destroying their chances of growth in the organization. Alternative HR model: If this traditional HR model is seen in another way, it can also be said that human resource management involves five components: attract, recruit, select, maintain and terminate. Often recruitment and selection come under the same head. (Baron, 2002) Attracting the right workforce is the first step in seeing a long term profitable relationship with the employees. This is done by advertising for jobs in the right media, where potential employees will have access to it. And having a good reputation of the company in the market and a high goodwill, to attract a number of candidates. Then recruitment is done to see the compatibility of each candidate with the organization. This can be done through taking multiple interviews of the candidates, making them sit for an assessment test specially designed for that company and giving them management scenarios in which they explain what their reaction will be. Not every candidate which applies might be fit to do the job, not because he is not that talented, but just because the compatibility level between what the organization stands for and wants and what the individual is all about is very low. Selection takes place ultimately, in which candidates who have thoroughly matched the job description with what they are will be selected. Then comes the real task that is to maintain this workforce, for as long as possible, through training them, giving them the right incentives in the form of good compensation packages or other benefits. And last but not the least, it is essential to do termination as well, because workforce which becomes unhealthy for the organization should be laid off as soon as possible before it does further damage to the company. It is important to take a termination interview before any employee formally leaves the organization, whether the company has laid him/her off or the employee has resigned themselves. In this interview, their experiences are shared and the company gets to have an insight as to why the employee is leaving the organization in the case there is a resignation. (Armstrong, 2000) Conclusion: To conclude, it can be said that the company needs to incorporate strategy within its human resource because the HR is one of the few components which can play a vital role in breaking or making the company in the long run. Employees are the people who are running the company and who represent the company wherever any dealings of the company are made and thus they need to be as developed as can be possible. References 1. Armstrong, Michael (2000) Strategic Human Resource Management: A Guide to Action. Kogan Page 2. Baron, Angela (2002) Strategic HRM: The Key to Improved Business Performance. CIPD Publishing 3. Armstrong, Michael (2006) A Handbook of Human Resource Management Practice. Kogan Page 4. Jackson, Susan (2006) Strategic Human Resource Management. Blackwell Publishing. 5. Turnbull, Peter (1992) Reassessing Human Resource Management: Conflicts and Contradictions. Sage 6. Porter, Michael (1998) Competitive Advantage: Creating and Sustaining Superior Performance. Free Press 7. Pfeffer, Jeffrey (1994) Competitive Advantage Through People : Unleashing the Power of the Work Force. Harvard Business Press 8. (2001) Strategic HRM. Retrieved August 13, 2008, from HRM Guide. 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